Municipal WiFi: A not-so-free lunch

SETTING THE RECORD STRAIGHT (publ. 08/08/07)An article about the Joint Venture Wireless Project incorrectly identified one of the test sites for the project. The two test cities are Palo Alto and San Carlos.
It's been more than a year since Silicon Valley's Joint Venture Wireless Project first announced plans to build a regional wireless network, giving millions of local residents free access to the Internet.

But that network won't be so free after all, and the area's millions of local residents may not really use it.

While initially the project was lauded as a way to give the masses affordable Internet, key organizers have gently shifted the focus of the network from serving residents, for free, to giving businesses and city governments wireless access, for a price.

"The idea that we've always had is that this is not just a WiFi network for people to get their e-mail," said Seth Fearey, project leader for the Joint Venture Wireless Project.

Right from the start we said, `We know the operator has to make money; it's very, very important there be a sustainable business model."'

Once complete, the network is expected to span 1,500 square miles - one of the largest in the country - and, yes, be available for free to 2.4 million people with download speeds of 1 megabit per second.

But the increasing focus on dollars and cents reflects a trend nationwide: As cities strive to provide wireless Internet service, they're realizing it can't truly be free.

Advertisement

Sure, once the towers and antennas go up in a city, residents will be able to walk to the park with a laptop or iPhone and pull up WiFi - but someone has to pay for all those antennas and so-called "access points."

That's where the 40 or so cities in the region come in. They will be asked to pay to use the network, enabling police officers, firefighters and even housing inspectors to file reports on the go.

At first, pioneering companies and some communities thought the networks could be for the sole use of residents and funded by advertising - before you can access a Web site you'd be greeted with a quick pop-up commercial.

But five years after Mountain View's MetroFi launched on the premise of providing advertiser-supported wireless access, the company has changed its tune. It now only builds networks in communities where the city government has agreed to pay for services or be an "anchor tenant" in the network.

"I think the business model has been really evolving," said MetroFi President and Chief Executive Chuck Haas. "A little less than a year ago, we moved to the 100 percent anchor tenant model; we only build it for cities who are using the network for municipal uses."

MetroFi, which is constructing or has built networks in nine cities, still provides free service to residents, but only after it has a guaranteed contract - and revenues - from the city itself.

The shift is occurring, in part, because it's not clear how many people are actually using the free networks, and that makes it difficult to sell advertising.

As of June, 385 cities and counties nationwide were planning or had already built a wireless network intended for at least some consumer use, but actual use remains low, according to a July report by Forrester analyst Sally Cohen. Only 27 percent of U.S. households were using WiFi late last year, and most of those were using their home wireless connection, she said.

"Most mainstream consumers aren't equipped to use wireless networks," Cohen said. "Many of them don't have laptops. Also, they're not well acquainted with the idea of mobile Internet access, so the value of what it means to be computing `mobile-ly' is not clear to them."

Instead of relying on residents to use the network, communities should also ask how the city government, businesses and local universities might use wireless access, she said.

San Jose's information technology manager, Randy Murphy, agrees.

"We want to learn from different governance models and funding sources on how to capitalize on this," Murphy said, adding that he doesn't believe in a "free lunch."

Silicon Valley's wireless project is expected to cost $100 million to $150 million. Silicon Valley Metro Connect, the technology team building the network, will initially pay for it. It is asking the cities to commit to paying for certain services.

Cities will be able to evaluate how those services might work once one-square mile test sites in Santa Clara and Palo Alto are built. But those tests are months behind schedule, as Metro Connect works out contract details with city officials. Fearey said he believes construction will begin by late August or September.

A handful of cities in Santa Clara County are now assessing whether it's worth the cost, said Craig Settles, who along with Northrop Grumman, is doing a benefit analysis for the county. Palo Alto, Campbell, Santa Clara, Mountain View and Milpitas are participating in the cost-benefit assessment.

Settles said he believes the cities will see a need for wireless and five years from now the project will be up and running.

"It seems like there are reasonable heads at play behind this thing," he said.